CONTACT:
KEVIN GREGORY, CFO
(859) 586-0600 x1424
kgregory@pomeroy.com
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POMEROY IT SOLUTIONS, INC. ANNOUNCES THE FILING OF FISCAL 2005 THIRD QUARTER
RESULTS AND RESTATED FISCAL 2005 FIRST AND SECOND QUARTER RESULTS
Hebron, KY - March 31, 2006 - Pomeroy IT Solutions, Inc. (NASDAQ:PMRYE) today
announced that it has filed its quarterly report on Form 10-Q for the period
ended October 5, 2005 and the amended and restated quarterly reports on Form
10-Q for the periods ended April 5, 2005 and July 5, 2005.
For the fiscal third quarter ended October 5, 2005, the Company recorded
revenues of $185.0 million, a 7.7% decline from revenues of $200.5 million in
the third quarter of fiscal 2004. The diluted loss per share in the fiscal
third quarter of 2005 was $(0.12), which included an extraordinary provision for
doubtful accounts and restructuring and severance charges, and represented a
decline from diluted earnings per share of $0.15 in the prior year period.
Excluding the provision and charges, the third quarter 2005 diluted earnings per
share were $0.06.
For the nine months ended October 5, 2005, revenues increased 1.7% to $542.9
million from $533.9 million in the prior year period. For this nine month
period of fiscal 2005, diluted earnings per share were $0.11, inclusive of the
provision and charges described above, which represented a decline of 81.0% from
the diluted earnings per share of $0.58 in the prior year period. Excluding the
provision and charges, diluted earnings per share for the fiscal 2005 nine-month
period were $0.29.
"We are pleased to have now completed the filing of the fiscal 2005 third
quarter results along with the restatement process for the first two quarters of
fiscal 2005," said Stephen E. Pomeroy, CEO of the Company. "Our main focus in
2006 will be on controlling costs and improving service margins, while
maintaining customer satisfaction," said Mr. Pomeroy.
The Company amended its financial statements for the first and second quarter of
fiscal 2005. The table below highlights selected income statement items ($000's
except per share amounts):
First Quarter First Quarter Second Quarter Second Quarter
As Previously As As Previously As
Reported Amended Reported Amended
Revenue 165,590 165,832 193,671 192,025
Net Income 1,750 565 3,111 2,365
Earnings per
Share (diluted) $ 0.14 $ 0.04 $ 0.25 $ 0.19
The Company plans to conduct a conference call to discuss the restated financial
statements, the third quarter results and the full fiscal year 2005 results
after the Form 10-K for fiscal 2005 is filed.
As a national solutions provider, Pomeroy provides services that include:
outsourcing, application development, systems integration and other maintenance
and support services. The Company maintains a workforce of approximately 3,000
skilled, technical employees with the capabilities to plan, design, implement
and support all categories of its consulting, infrastructure and lifecycle
solutions offerings. Pomeroy helps clients leverage IT as an enabler to increase
productivity, reduce costs and improve profitability. Pomeroy has clientele
across a broad spectrum of industries, governments and educational
organizations. The Company reported revenues of $742 million for the year ended
January 5, 2005.
Certain of the statements in the preceding paragraphs regarding reporting
financial results constitute "forward-looking statements" for purposes of the
Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, and
as such they involve known and unknown risks, uncertainties and other factors
which may cause actual results to be materially different from those projected.
Factors which could cause actual results to differ materially from current
expectations include, but are not limited to, the nature and volume of products
and services anticipated to be delivered, the mix of the products and services
businesses, the type of services delivered, the Company's need for outside
consulting services, new acquisitions by the Company, terms of applicable
customer and vendor agreements and certification programs and the assumptions
regarding the ability to perform thereunder, the ability to implement the
company's best practices strategies, the ability to manage risks associated with
customer projects, existing market and competitive conditions including the
overall demand for IT products and services, and the ability to attract and
retain technical and other highly skilled personnel.
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands) October 5, January 5,
2005 2005
------------ -----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 129 $ 13,108
Certificates of deposit 4,638 4,561
Accounts receivable:
Trade, less allowance of $4,289 at October 5, 2005
and $1,462 at January 5, 2005 130,007 143,113
Vendor receivables, less allowance of $100 at
October 5, 2005 and January 5, 2005 5,769 5,790
Net investment in leases 3,146 3,814
Other 2,590 2,902
------------ -----------
Total receivables 141,512 155,619
------------ -----------
Inventories 13,832 17,188
Other 9,375 10,302
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Total current assets 169,486 200,778
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Equipment and leasehold improvements:
Furniture, fixtures and equipment 30,735 30,113
Leasehold improvements 6,591 6,187
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Total 37,326 36,300
Less accumulated depreciation 23,915 21,061
------------ -----------
Net equipment and leasehold improvements 13,411 15,239
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Net investment in leases, net of current portion 977 1,650
Goodwill 115,626 109,913
Intangible assets, net 3,078 3,702
Other assets 2,373 1,606
------------ -----------
Total assets $ 304,951 $ 332,888
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POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands) October 5, January 5,
2005 2005
------------ ------------
(Unaudited)
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of notes payable $ - $ 912
Short-term borrowings 3,686 20,153
Accounts payable 56,815 72,656
Deferred revenue 3,368 3,490
Employee compensation and benefits 7,760 8,245
Accrued restructuring and severance charges 6,007 7,585
Other current liabilities 8,651 6,778
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Total current liabilities 86,287 119,819
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Notes payable, less current portion - 250
Deferred income taxes 2,134 97
Commitments and contingencies
Equity:
Preferred stock, $.01 par value; authorized 2,000 shares
(no shares issued or outstanding) - -
Common stock, $.01 par value; authorized 20,000 shares
(13,400 and 13,188 shares issued at October 5, 2005
and January 5, 2005, respectively) 134 132
Paid-in capital 87,861 85,231
Accumulated other comprehensive income (loss) 24 (78)
Retained earnings 137,633 136,183
------------ ------------
225,652 221,468
Less treasury stock, at cost ( 810 and 778 shares at
October 5, 2005 and January 5, 2005, respectively) 9,122 8,746
------------ ------------
Total equity 216,530 212,722
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Total liabilities and equity $ 304,951 $ 332,888
============ ============
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
(in thousands, except earnings per share data) --------------------------
October 5, October 5,
2005 2004
------------ ------------
(Unaudited) (Unaudited)
Net sales and service revenues:
Sales - equipment, supplies and leasing $ 129,281 $ 139,403
Service 55,720 61,101
------------ ------------
Total net sales and service revenues 185,001 200,504
------------ ------------
Cost of sales and service:
Sales - equipment, supplies and leasing 120,058 129,621
Service 42,427 44,433
------------ ------------
Total cost of sales and service 162,485 174,054
------------ ------------
Gross profit 22,516 26,450
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Operating expenses:
Selling, general and administrative 19,005 18,818
Rent expense 830 906
Depreciation 1,187 1,052
Amortization 164 122
Provision for doubtful accounts 2,000 -
Restructuring and severance charges 1,662 2,423
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Total operating expenses 24,848 23,321
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Income (loss) from operations (2,332) 3,129
------------ ------------
Other expense:
Interest , net 152 32
Other 4 4
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Total other expense 156 36
------------ ------------
Income (loss) before income tax (2,488) 3,093
Income tax expense (benefit) (1,008) 1,221
------------ ------------
Net income (loss) $ (1,480) $ 1,872
============ ============
Weighted average shares outstanding:
Basic 12,583 12,240
============ ============
Diluted 12,583 12,366
============ ============
Earnings (loss) per common share:
Basic $ (0.12) $ 0.15
============ ============
Diluted $ (0.12) $ 0.15
============ ============
* Dilutive loss per common share for the three months ended October 5, 2005
would have been anti-dilutive if the number of weighted average shares
outstanding were adjusted to reflect the dilutive effect of outstanding stock
options.
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended
(in thousands, except earnings per share data) --------------------------
October 5, October 5,
2005 2004
------------ ------------
(Unaudited) (Unaudited)
Net sales and service revenues:
Sales - equipment, supplies and leasing $ 375,617 $ 407,724
Service 167,241 126,149
------------ ------------
Total net sales and service revenues 542,858 533,873
------------ ------------
Cost of sales and service:
Sales - equipment, supplies and leasing 347,438 377,638
Service 124,941 91,685
------------ ------------
Total cost of sales and service 472,379 469,323
------------ ------------
Gross profit 70,479 64,550
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Operating expenses:
Selling, general and administrative 56,861 44,570
Rent expense 2,556 2,451
Depreciation 3,624 2,968
Amortization 624 201
Provision for doubtful accounts 2,000 -
Restructuring and severance charges 1,794 2,423
------------ ------------
Total operating expenses 67,459 52,613
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Income from operations 3,020 11,937
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Other expense:
Interest , net 579 1
Other 5 27
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Total other expense 584 28
------------ ------------
Income before income tax 2,436 11,909
Income tax expense 986 4,675
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Net income $ 1,450 $ 7,234
============ ============
Weighted average shares outstanding:
Basic 12,542 12,243
============ ============
Diluted 12,652 12,419
============ ============
Earnings per common share:
Basic $ 0.12 $ 0.59
============ ============
Diluted $ 0.11 $ 0.58
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POMEROY IT SOLUTIONS, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
(in thousands, except earnings per share data) ---------------------------
AS REPORTED PROFORMA(1)
October 5, October 5,
2005 2005
------------- ------------
(Unaudited) (Unaudited)
Net sales and service revenues:
Sales - equipment, supplies and leasing $ 129,281 $ 129,281
Service 55,720 55,720
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Total net sales and service revenues 185,001 185,001
------------- ------------
Cost of sales and service:
Sales - equipment, supplies and leasing 120,058 120,058
Service 42,427 42,427
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Total cost of sales and service 162,485 162,485
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Gross profit 22,516 22,516
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Operating expenses:
Selling, general and administrative 19,005 19,005
Rent expense 830 830
Depreciation 1,187 1,187
Amortization 164 164
Provision for doubtful accounts 2,000 -
Restructuring and severance charges 1,662 -
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Total operating expenses 24,848 21,186
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Income (loss) from operations (2,332) 1,330
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Other expense:
Interest , net 152 152
Other 4 4
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Total other expense 156 156
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Income (loss) before income tax (2,488) 1,174
Income tax expense (benefit) (1,008) 475
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Net income (loss) $ (1,480) $ 699
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Weighted average shares outstanding:
Basic 12,583 12,583
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Diluted 12,583 12,660
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Earnings (loss) per common share:
Basic $ (0.12) $ 0.06
============= ============
Diluted $ (0.12) $ 0.06
============= ============
(1) Excludes provision for doubtful accounts, restructuring and severance
charges
POMEROY IT SOLUTIONS, INC.
PROFORMA CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended
(in thousands, except earnings per share data) ---------------------------
AS REPORTED PROFORMA(1)
October 5, October 5,
2005 2005
------------- ------------
(Unaudited) (Unaudited)
Net sales and service revenues:
Sales - equipment, supplies and leasing $ 375,617 $ 375,617
Service 167,241 167,241
------------- ------------
Total net sales and service revenues 542,858 542,858
------------- ------------
Cost of sales and service:
Sales - equipment, supplies and leasing 347,438 347,438
Service 124,941 124,941
------------- ------------
Total cost of sales and service 472,379 472,379
------------- ------------
Gross profit 70,479 70,479
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Operating expenses:
Selling, general and administrative 56,861 56,861
Rent expense 2,556 2,556
Depreciation 3,624 3,624
Amortization 624 624
Provision for doubtful accounts 2,000 -
Restructuring and severance charges 1,794 -
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Total operating expenses 67,459 63,665
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Income from operations 3,020 6,814
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Other expense:
Interest , net 579 579
Other 5 5
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Total other expense 584 584
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Income before income tax 2,436 6,230
Income tax expense 986 2,523
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Net income $ 1,450 $ 3,707
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Weighted average shares outstanding:
Basic 12,542 12,542
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Diluted 12,652 12,652
============= ============
Earnings per common share:
Basic $ 0.12 $ 0.30
============= ============
Diluted $ 0.11 $ 0.29
============= ============
(1) Excludes provision for doubtful accounts, restructuring and severance
charges.